The government is working on a credit guarantee scheme to enable banks to provide additional 10-15 per cent working capital to MSMEs for the payment of wages, sources said.

One of the proposals mulled is to provide 10-15 per cent additional line of credit by banks over the working capital limit of the MSME sector.

Banks are now offering an extra line of credit of 10 per cent based on working capital limits.

This loan, especially for wage payment, will be backed by a proposed credit guarantee fund so that lenders’ money is secured in case of default by any borrower, the sources said.